Ireland-based CRO Icon unveiled higher than expected revenue and backlog increases in 2012 when compared to 2011, and the company expects even stronger results in 2013.
The CRO (contract research organization) revealed a nearly 18 per cent increase in revenue in 2012, when compared with 2011, which came from a higher concentration of top client sales and the addition of more than 1,000 employees.
A shift toward more outsourcing is also to be expected in 2013, and Icon sees “that trend continuing as we work with existing and potential partners to bring innovation to the drug development process,” Ciaran Murray, CEO of Icon, said in a conference call last week. He added that the company expects revenue to grow between 13 per cent and 16 per cent in 2013 and it will be driven by small, incremental gross margin increases.
For the first half of 2013, it’s expected the margin will be in the “region of 6% to 7%, which is recovering from the low points that we've seen in Q3 and Q4,” Murray said. “But we're certainly positioning the [central lab] for the level of controlled, high-quality growth.”
Wells Fargo senior analyst Tim Evans also seems optimistic about Icon’s future. He said the bank believes the “market underestimates [Icon’s] ability to achieve its 12% target margin in the reasonably near term,” and that the company “is undervalued as the market misunderstands its balance sheet relative to competitors.”
2012 was a year of various acquisitions for Icon. Just recently the company closed its acquisition of the clinical trials division of Cross Country Healthcare . This acquisition gives the company an increased presence in the US and may give it an edge over Parexel, which is struggling with its use of contractors.
“We also continue to invest in our differentiating innovative technologies and fully developed our biosimilar and biomarker offerings,” he noted.
In terms of future dealmaking for its contract business, Murray said the company has seen more interest from small and mid-sized pharma and biotech companies. He also noted recent progress in its deals with smaller biotechs, although the company’s “work in the biotech sector has been more transactional over the last couple of quarters.”